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Rochester Sports and Entertainment Arena Strategic Feasibility Study

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Rochester Sports and Entertainment Arena Strategic Feasibility Study STRATEGIC FEASIBILITY STUDY MAY 6, 2015 FEASIBILITY TEAM INTRODUCTION PAGE 1 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Hammes Company is a full‐service real estate development and investment firm. We have been directly involved in leading several of the largest and most complex sports and entertainment destinationprojectsintheindustryoverthe past decade. PAGE 2 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Hammes Company is one of America’s leading real estate advisory, development and investment companies. Our primary business is working with leading institutions – both public and private – to devise and execute community economic development and investment strategies. Mayo Clinic Minnesota Sports Facility Authority / Minnesota Vikings National Football League City of Allentown, Pennsylvania Green Bay Packers Detroit Lions State of Wisconsin Ford Family University of Wisconsin – Madison Tisch Family Interests / NY Giants Milwaukee Bucks Robert Wood Johnson IV / NY Jets Cleveland Browns University of Southern California PAGE 3 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Sink Combs Dethlefs has a long standing reputation for excellence in event facility design. Over the Past 53 years, we have designed: 50+ Arenas & Event Centers 250+ Sports & Entertainment Projects Projects in 31 States & 5 Countries 45+ Nationally Award‐Winning Projects PAGE 4 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Sink Combs Dethlefs understands the functional aspects of an entertainment venue: the moving parts, that make a building or complex successful. The vision; the atmosphere; the impression it leaves; is one of the defining aspects of a facility and the one of the hardest to achieve. It takes great consideration of space and place. The building must function to a degree that function goes unnoticed for the atmosphere of a campus venue to shine through. Target Center Inner Mongolia Event Center Crisler Center Chesapeake Energy Arena PPL Center Erie Insurance Arena Cross Insurance Arena 1st Bank Event Center Cedar Park Events Center Independence Event Center MTS Centre Denny Sanford Premier Center The Schottenstein Center Robins Center PAGE 5 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Since 1996, Johnson Consulting has been serving public‐ and private‐sector clients in North America and worldwide. Our clients include state, county, and municipal governments, sports franchise owners and teams, convention and visitors bureaus, asset and portfolio managers, financial institutions, private‐ sector developers, and universities and colleges. PAGE 6 INTRODUCTION PAGE 7 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Introduction / Statement of the Problem: Although the $79 million of Civic Center improvements currently under construction are significant, the City of Rochester is still in need of a modern multi‐purpose community arena, which would add significant support to the success of to the Civic Center complex as well as helping to establish Rochester as a major regional destination for business, hospitality, entertainment and sports. Benefits of New Arena: • A vibrant and flexible downtown gathering place for the Rochester community • Significant return on public investment, including economic and fiscal impacts • Increased diversity and number of arena events • Increased overall visitation and activity for downtown Rochester • Hotel room nights • Restaurant and bar revenue • Support service revenue • Retail activity • New Jobs PAGE 8 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Key Issues: • Taylor Arena, the existing venue added to the Civic Center in 1986, can only accommodate a maximum of 3,400 patrons in permanent seats and up to approximately 4,900 patrons when temporary chairs are added. • The sightlines from the permanent seating positions are poor for most events as compared to modern arenas and concert venues. • Operational flexibility is limited for many event types, including concerts, family shows, hockey and other sports. Promotors do not like the configuration. • Arena and adjacent park areas need to work together to create operational synergies and new event opportunities. • Due to these limitations and its age, the Taylor Arena is nearing functional obsolescence and is not allowing Rochester to reach its full potential as a regional destination for entertainment and sports – as well as the significant collateral benefits that are associated with these events. PAGE 9 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Overview of the Study: This study provides a vision for a new, state of the art, multi‐purpose arena at the Mayo Civic Center. • Evaluation of the Rochester market and potential demand to support the arena and specific arena uses including USHL, concerts, trade shows, family shows and other events. • Provide preliminary recommendations for arena size, configuration, program and potential enhancements (e.g. connections to the adjacent park and convention center). • Create target budget ranges for several arena options • Discuss of potential economic impacts of the proposed arena. • Provide a preliminary development schedule and discuss next steps. PAGE 10 MARKET ASSESSMENT PAGE 11 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Market Assessment Overview: We have engaged Johnson Consulting, based in Chicago, to provide market data related to the USHL, concerts, family shows, trade shows and other events due to their familiarity with the upper Midwest market. • Assessment of Median Household Income and employment base in comparison to national averages and other competing markets. This is good indicator of greater levels of disposable income for entertainment spending. • Evaluation of average USHL attendance per game in other markets as an indicator for potential attendance ranges in Rochester. • Preliminary assessment of demand for concerts, family shows and other events • Preliminary assessment of potential demand ranges for premium seating including Suites, Club Seats and Loge Boxes. • Identification of future study needs including user surveys and promoter surveys to better understand detailed demand by segment (Premium, GA other), pricing and event mix. PAGE 12 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Market Overview MARKET ANALYSIS OF ROCHESTER, MN ARENA • Strong Population Growth of Historic & Current Population - City of Rochester (2000-2015) % Gr ow t h % Gr ow t h CAGR* 2000 2010 2015 1.3% annually since 2000 2000-2010 2010-2015 2000-2015 U.S. 281,421,906 308,745,538 318,536,439 9.7% 3.2% 0.8% • Both City (1.3%) and MSA Minnesota 4,919,479 5,303,925 5,442,213 7.8% 2.6% 0.7% (1.0%) are growing at a rate Rochester MSA 184,740 206,877 213,487 12.0% 3.2% 1.0% faster than the rest of City of Rochester 91,816 106,769 110,887 16.3% 3.9% 1.3% Minnesota (0.7%) * Compounded Annual Grow th Rate Source: Esri ArcGIS BAO, Johnson Consulting • Very Strong Median Household Income ($64,146 Rochester vs Median Household Income - City of Rochester (2015-2020) $53,217 National), a key % Growth CAGR* 2015 2020 indicator for greater levels of 2015-2020 2015-2020 disposable income for U.S. $53,217 $60,683 14.0% 2.7% entertainment spending Minnesota $60,056 $70,243 17.0% 3.2% • Strong Growth in Median Rochester MSA $63,939 $75,688 18.4% 3.4% Household Income is projected Rochester City $64,146 $75,457 17.6% 3.3% * Compounded Annual Growth Rate Source: Esri ArcGIS BAO, Johnson Consulting PAGE 13 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY 2015 MEDIAN HOUSEHOLD INCOME BY ZIP CODE PAGE 14 ROCHESTER SPORTS & ENTERTAINMENT ARENA STRATEGIC FEASIBILITY STUDY Largest Employers - Rochester MSA MARKET ANALYSIS OF ROCHESTER, MN ARENA Employer Industry Employees Unemployment Rate - Olmsted County (2004-2013) Mayo Clininc Health Care 35,000 Olmsted County Minnesota Rochester City Rochester MSA U.S. IBM Electronic 4,400* Rochester Public Schools Education 2,460 Rate Change Rate Change Rate Change Rate Change Rate Change Olmsted County Government 1,204 2010 5.9% - 7.4% - 5.9% - 6.3% - 9.6% - Olmsted Medical Center Health Care 1,200 Mobile Concrete mixers, McNeilus Truck & Manuf 1,050 2011 5.3% (0.6) 6.5% (0.9) 5.3% (0.6) 5.6% (0.7) 8.9% (0.7) garbage trucks Charter Communications Communications 873 2012 4.4% (0.9) 5.6% (0.9) 4.4% (0.9) 4.6% (1.0) 8.1% (0.8) City of Rochester Local Government 840 Kahler Hospitality Group Hotel/Restaurant Services 680 2013 4.0% (0.4) 4.9% (0.7) 4% (0.4) 4.2% (0.4) 7.4% (0.7) Crenio Fabricated Metal 652 RCTC Post Secondary Education 500 2014* 3.4% (0.6) 4.1% (0.8) 3% (0.6) 3.6% (0.6) 6.2% (1.2) Federal Medical Center Corrections/Medical 450 *December 2014 is most recent data available Refrigerated Lunch & Reichel Foods 450 Source: Bureau of Labor Statistics, Johnson Consulting Snacks Samaritan Bethany, Inc. Health Care 440 Seneca Food Food Processing 400 Benchmark Electronics Design/Engineering 396 Hiawatha Homes Res.Services 380 Market Overview Kemps Food Processing 341 McNeilus Steel, Inc Steel Fabrication 321 Cardinal of Minnesota, Ltd Res/Services 300 • City of Rochester has very low unemployment rate of 3% Pace Dairy Food Processing 280 Halcon Manufacturing 255 which is about half of the national average of 5.2% Think Bank Banking 250 Rochester Meat Company Meat Processor 250 • Relatively high median income levels for local and regional Bard Medical Manufacturing 250
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